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Economics, Deregulation, and the Protests in the Middle East

March 4, 2011

A historic wave of protests has engulfed North Africa and the Middle East, overthrowing governments in Tunisia and Egypt, and likely soon Libya. It has threatened the governments of Yemen, Oman, Morocco, and Bahrain, and even to a minor extent China. Initially I was hesitant to ascribe too much emphasis to the role of economics in these protests, as I didn’t want to undermine the true political oppression these protesters were facing and rebelling against. However, as country after country faced protest after protest I saw a pattern emerging.

The pattern across the middle east was first called to my attention by this blog and further strengthened by insight from Economist Nouriel Roubini, who is known for his work on financial crises and correctly predicting the housing bubble.

The pattern is one of high youth unemployment, stagnant economic growth (often despite large oil reserves and a wealthy upper class), widening income gaps, lack of democratic representation, and the privatization of industry. This is picture holds true for all of the countries currently suffering from political protests and crises. Indeed this economic pattern was noted by a New York Times article.

However, I would like to point out that this very pattern also describes the conditions in most developed western countries as well. So what does this all mean?

Analysis

Historically the youth of society have been the most vocal for changing the status-quo. And youths who perceive that they have no future have nothing to lose from protesting for change. We’ve seen a similar role of youths this year in protests in Britain, Europe, and the U.S. during this economic recession.

Furthermore, the widening income gap since the mid 1970s is present across most countries in the developed and developing world. This is a characteristic of what was then a new ideology: globalization. The globalized world brought about huge productivity gains, but at the expense of worker salaries being forced to be competitive on an international scale. This has led to a widening income gap in most countries, with rising productivity going to the wealthy while wages are flat even as overall GDP and productivity per person increases. Privatization of public goods is another facet of globalization and has been significantly on the rise throughout both the developed and developing world, pushed in the developing world in large part by IMF requirements.

What we see is that absent the ability to make real political reforms, massive protests have the possibility to enact democratic change. In times of economic instability the need to for the populace to express their wants grows, we see this in the United States with increased protests and debate on both the left and right regarding the future of the country’s economy. In Egypt, Libya, and throughout the Middle East governments have stifled the ability of people to enact meaningful economic reform and control their livelihood. So people desperate to feel in control of their economic futures have turned to fight what makes them feel as though their lives are out of control, their oppressive political systems. At least in the U.S. our political system lets people think they have control over their own economic destiny.

What we see is these protests are a direct result of globalization. I have talked with friends living in the Middle-East and they have said that the youth of today are different than their elders. Globalization, mass media, and the internet have brought about an increased emphasis on the self and self-expression. Collectivist beliefs are still present, through religion and tradition, but within these frameworks there is an increase in the importance of self-identity. Globalization has brought the consolidation of wealth and a focus on self-identity, which coupled with autocratic regimes has led to a focal point for the rage of the 2010 decade’s underprivileged youth.

This is a generation growing up with greater and greater technology and productivity. But also one where the benefits of this progress seem to be increasingly consolidated. In countries with a single regime and ruler to blame the anger has been concentrated, in countries such as the U.S.A. where protesters have no single person to protest what comes of this social anger is yet to materialize in a direction.  It is ironic to say globalization is good because it brought down these oppressive regimes, but I must say it. However in the same breath, it is through the consolidation of wealth and privilege (which appears even more offensive in a dictatorship) that it has accomplished the task of sufficiently angering and impoverishing the world’s working class.

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